In the coming year, residents in various states across the country may experience an uptick in water tariffs, with the potential for a new tariff mechanism to be enforced by 2024.

Natural Resources, Environment, and Climate Change Minister Nik Nazmi Nik Ahmad announced his intention to present a proposal to the Cabinet by year-end.

Discussions within the National Water Resources Council have revealed a consensus among state governments, regardless of political affiliations, on the need for a tariff review. Minister Nik Nazmi emphasized that the existing tariffs are too low, a sentiment echoed by most states.

The proposal for a new tariff-setting mechanism will be presented to the Cabinet before the end of the year, with hopes of implementation by 2024. However, it remains uncertain whether all states will implement higher tariffs once Cabinet approval is granted.

Earlier, on November 1, Minister Nik Nazmi had mentioned the development of a mechanism that would obviate the need for states to seek ministerial approval for tariff adjustments.

The plan is to allow water operators to determine tariff rates while ensuring the interests of both the B40 (bottom 40%) and M40 (middle 40%) consumers are safeguarded.

In May, the Federal government announced plans to establish a maximum rate for tariff revisions, in response to requests from several states looking to increase domestic water tariffs for financial sustainability.

Meanwhile, in July, the acting CEO of Pengurusan Air Selangor Sdn Bhd, Abas Abdullah, expressed hope that the government would reconsider water tariffs in the Klang Valley, which had remained unchanged for 17 years.

He pointed out that the revenue of RM2.45 billion collected in the previous year was insufficient to cover operational costs and capital expenditure.

However, Menteri Besar Dato’ Seri Amirudin Shari, clarified that the state government had not yet made any decisions regarding water tariff increases.

Their primary focus is on ensuring the well-being of the people and avoiding any additional burdens. The state government remains committed to augmenting the water services system that provides for over 8.4 million residents in Selangor, Kuala Lumpur, and Putrajaya.

Source: Business Today​